North Carolina State Overview

State Facts

Analysis

While North Carolina’s ranking is only mediocre on fiscal policy, on personal freedom it ranks as the best of the socially conservative southern states, most of which score poorly on that dimension. North Carolina is also above average on regulatory policy.

North Carolina’s taxes have been consistently close to the national average over the past decade (at 9.2 percent of income in FY 2010), while its government consumption plus subsidies and employment scores are slightly worse (higher) than average, and its debt is significantly better (lower) than average.

On regulatory policy, North Carolina’s labor laws are excellent—it has a right-to-work law and no minimum wage—but occupational licensing needs to be rolled back, especially for acupuncturists, landscape contractors, cat and dog dealers, and athletic trainers. Real property rights are largely protected, although local zoning laws are a bit stricter than in the rest of the South, and eminent domain requires further reform. Health insurance freedom declined significantly with the addition of many new mandates in the 2009—10 legislative session; it is now below average, especially since the state’s regulators enjoy the right of “prior approval” over small group and nongroup premiums. The state liability system is solid. However, insurance regulation is excessive, especially for personal automobiles.

Personal freedom in North Carolina goes beyond just tobacco and guns. Unsurprisingly, given its history, cigarette taxes and smoking regulations are indeed minimal. But gun control laws are ranked only about average nationally, not unlike
several other southern states: North Carolina makes open and concealed carry fairly easy, but it licenses dealers, requires permits with background checks even for private sales of handguns, specifies a duty to retreat from aggressors outside the home, and requires sellers to maintain sales records. North Carolina does not have civil asset forfeiture at all; only convicted criminals must forfeit property. Educational freedom ranks favorably, with few regulations on private schools. Most surprisingly, North Carolina has lower crime-adjusted incarceration and victimless crimes arrest rates than the nation as
a whole. There has been, however, a slight deterioration in criminal justice quality between 2008 and 2010. The areas of personal freedom in which North Carolina ranks distinctly worse than average are alcohol (there is a state spirits monopoly with a high markup), marijuana (there is no depenalization of any marijuana offenses, no medical use of marijuana allowed, and “high-level” possession—even on the first offense—and “low-level” cultivation are both felonies), gaming, and marriage.

Policy Recommendations

Cut spending on hospitals, possibly through privatization; it is currently very high. Cut general sales, individual income, and business income taxes, which are also high.